When an Auditor Tests a Client's Cost Accounting System,the Auditor's

question 19

Multiple Choice

When an auditor tests a client's cost accounting system,the auditor's tests are primarily designed to determine that

• A) Quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand.
• B) Physical inventories are in substantial agreement with book inventories.
• C) The system is in accordance with generally accepted accounting principles and is functioning as planned.
• D) Costs have been properly assigned to work in process, finished goods, and cost of goods sold.

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Definitions:

Pleasure Principle

A concept in psychoanalytic theory suggesting that individuals seek pleasure and avoid pain in order to satisfy biological and psychological needs.

Reality Principle

A concept in psychoanalytic theory referring to the ability of the mind to assess the external world and act upon it accordingly, often in contrast to the pleasure principle.

Ego

In psychoanalytic theory, the part of the personality that mediates between the desires of the id and the constraints of the real world.

Superego

In psychoanalytic theory, the part of a person's mind that acts as a self-critical conscience, reflecting social standards learned from parents and others.